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New-car sales for September: Winners and losers

Strong truck demand, deals boost Toyota, GM, Nissan, Ford volume

October 4, 2017

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U.S. light-vehicle sales rose 6.3 percent in September -- the first gain of the year -- on strong truck demand and fatter deals.

Some analysts expected industry volumes last month to benefit from replacement demand for hundreds of thousands of vehicles damaged by hurricanes in Texas and Florida. But the robust results -- underscored by a seasonally adjusted annualized sales rate of 18.58 million for the month -- blew well past the most optimistic forecasts.

It is the highest SAAR since the 20.64 million rate recorded in July 2005 behind employee-style discounts.

“The auto industry showed renewed strength in September, bringing optimism for a third consecutive year with sales topping 17 million new vehicles,” said Jack Hollis, group vice president and general manager of the Toyota division.

It was a particularly strong month for light trucks, with sales advancing 12 percent, while car demand remained weak and down 3.3 percent.

“The overall strength of the U.S. economy is the main force driving the market,” GM Chief Economist Mustafa Mohatarem said in a statement. “With the U.S. economy strengthening, retail sales should remain strong for the foreseeable future.”

In fact, sales are a bit flat. Automotive News reports Certified Pre-Owned sales dropped 3.2 percent in July (the latest data available) from July 2016, while in the first seven months this year sales ...

After the hurricanes

U.S. sales have now fallen 1.7 percent this year through September after seven straight annual gains and a record 2016.

The seasonally adjusted annualized pace of sales was expected to come in at 17.4 million, down from 17.72 million in September 2016, according to 12 analysts surveyed by Bloomberg. There were 26 selling days last month compared to 25 in September 2016.

Edmunds estimates average new-vehicle incentives spiked 21 percent to $3,506 last month compared with September 2016. ALG says the average new-vehicle incentives rose 1.5 percent to $3,742 last month over Sept. 2016, with GM, Nissan and FCA US the biggest spenders among mass-market automakers. (See chart below.)

Even with the fatter deals, inventories continued to grow last month, with the average new vehicle now sitting on a dealership lot for 80 days before being sold, Edmunds says.

And Edmunds says 2018 models represented only 16 percent of total sales last month as consumers took advantage of fatter deals on outgoing models.

“With 6 of the 12 major automakers expected to pay in excess of $4,000 per car in sales incentives, one must question whether we will establish a new normal in terms of spending or whether automakers will collectively pull back and more closely align production with natural consumer demand,” said Eric Lyman, ALG’s chief analyst.